Berlin Home Rent Index Increased 3.1% Annually in 2011 and 2012

May 23 (Bloomberg) -- Berlin Mietspiegel, the benchmark
residential rent index for the German capital, showed that rates
rose 3.1 percent a year in 2011 and 2012, a slower gain than the
previous two-year period.

The index, published today by the Berlin Department for
Urban Development, showed an average annual rise of 4 percent
for 2009 and 2010. Analysts expected an increase of 2 percent to
4 percent a year based on estimates compiled by Berlin landlords
GSW Immobilien AG and Deutsche Wohnen AG, said Thomas
Rothaeusler, an analyst at Commerzbank AG.

Germany’s rental indexes are among the most important
drivers of housing prices in cities where they applies because
landlords use them as a guide to set rents. Owners are able to
raise rents more sharply in the 12 months following the
publication of an index. Cities such as Munich, Cologne and
Hamburg also publish indices to help regulate rents.

“The Mietspiegel is the most important tool used to adjust
rents,” said Rothaeusler. “Deutsche Wohnen, for example,
raised its like-for-like rents by 4 percent after the
Mietspiegel came out.”

Deutsche Wohnen, Germany’s largest property company by
market value, has about 54 percent of its apartments in Berlin,
according to its 2012 annual report. GSW, the fifth-largest by
market value, operates only in the city. Gagfah SA, the third-biggest, has about 11 percent of its apartments in the city,
according to its website.

Divided Market

The index, while influential, is not legally binding and is
only used by landlords to avoid disputes with tenants over rent
increases, said Daniela Augenstein, a spokeswoman for the Urban
Development Department.

The Mietspiegel index isn’t considered an accurate
reflection of the market because it is politically influenced,
said Torsten Klingner, an analyst at Warburg Research.

The Mietspiegel is compiled based on data collected during
a year-long survey of tenants and landlords, and numbers are
fine-tuned following negotiations between tenant and landlord
associations and local officials, said Augenstein.

The index, only compiled every other year, is partly to
blame for the lag in German rent changes, said Rothaeusler.